ljr

It is my understanding Relius will have programming in place for the 1/1/05 deadline.

Not being an expert on IRA's all I can tell you is that the annual cap on contributions is per taxpayer. Therefore, while you could open multiple IRA's, the grand total you could contribute is limited to the same amount. Good for you getting started now!! I'm sure you'll get replies from the many experts on IRA's who read BenefitsLink.

Can anyone help me locate the thread I'm sure I saw on the topic of records retention for ERISA plans? I believe it cited something in ERISA on this topic. Cite from IRS? In reviewing old files, I'm finding our organization has records that date back well over 20 years and I'd like to document that it's okay to shred them now. Somehow keeping records for the current year plus 10 prior comes to mind? Thanks for any help you can offer. What does your organization do about retention of old allocations, documents, distribution forms, etc.

mbozek - thanks for another of your common sense replies! I'm still curious is anyone has figured out how to implement on recordkeeping a fund closing at the participant level?

If they have the match in a 401(a) plan, I don't know of any exception to the audit requirement. Let's see what one of the CPA's says!

Does anyone out there have any ideas on how to implement the soon to be required restrictions? I don't see how the plan sponsor can be liable for an action outside their control. I do strongly agree with the prior post about adding a similar investment option so all participants have access to a fund with at least very similar investment objectives. From what I've been able to find out so far, the fund closing to new participant investors rather than at the plan level is the first time this has ever been done.

Id ask yourself if it makes economic sense to learn what you'd need to know to administer this plan properly. While a 403(b) can look a lot like a 401(k), it's not exactly the same thing and the problems arise in the details. We don't handle any 403(b)'s now but my recollection is that one difference is that your cannot have a waiting period to defer in a 403(b). Also, you do not need to test the deferrals. Try The ERISA Answer Book. Good luck!

Yes, you can have employees transfer their 403(b) money to 403(b) accounts at a mutual fund company of their choice. We had a small plan that did this last year. I'd be careful of making a recommendation here as to which mutual fund company - fiduciary responsibility and all that. As to mutual fund companies, the following have good reputations: Vanguard, American Funds, Fidelity. As usual, you should get advice from your ERISA counsel.

To answer Austin, there is a single bucket for after tax. The recordkeeping system will track the contributions received which is the basis recovered tax free upon distribution. The recordkeeping experts can tell you more. It usually isn't shown but is definitely stored. Some plans do include basis on participant statements but most do not, often due to lacking good information and deciding to put off the problem until distribution time. The catch is old plans where this information was not input from provider to provider. The last post sadly is correct that the participant ends up with the problem.

Corbel has a 403(b) document and supporting forms. I believe the cost is about $500 and you do the data entry on line with a password and can edit your document. The prior posts raises good questions. Good luck and your client should retain ERISA counsel if they have not done so already.

We ask the insurance companies to give us a cash surrender value as of the plan year end and use this figure as it is what we'd receive if we sold the policy so consider it fair market value. The written report from the insurance company is good documentation for your file. I usually request cash value information at the same time as PS58 information. Participant statements are another whole matter especially for daily plans as there's no way you'll get the cash values until after the fact. We decided to update for accounting and participant statements annually. I believe the latest Rev. Proc. addressed those policies with "springing" cash values? The policies we're dealing with are the usual type with gradually increasing cash values. I'll be interested to learn what others are doing.

Speaking of UBTI, do any of the accountants out there know who properly files the 990-T? The Trustee or the Plan Sponsor? We have two plans that have this tax and for one the Plan Sponsor has always filed the 990-T, paid the tax and requested reimbursement from the Trust. For the other plan, the Trustee has always filed the return and paid the tax directly from the Trust.

Thanks, Dave!! You are doing a great job and this is a great resource.

I'd be curious to learn if anyone knows if ETF's will work on traditional daily platforms? Somehow, I think not, but as someone else who posts says, then what do I know?!?

You are on the right track with the mechanics. Yes, you need a transfer of ownership form so the plan can transfer ownership to the Insured. Be sure to change the beneficiary at the same time to the estate of the Insured. You want to hand the new owner the policy with recorded copies of the ownership and beneficiary changes. It's a good idea to also ask for a beneficiary form so the Insured can name a beneficiary of his/her choice. Yes, you do need to collect a check and deposit it to the trust to the account of the participant. It might be a good idea to get a cashier's check.

I posed this question to an IRS representative at an EB conference last year and learned there is no answer to the question of balances less than the cost to make the distribution. Here's hoping someone out there has learned something since then!

Tbob - My plan is to do the calculations based on when the $700 a month payments begin. I can't think of anything that says this is okay, but the regs do deal with something similar relating to loans being limited to 50% of the participant's account balance AT THE TIME THE LOAN IS GRANTED. There is no such thing as thinking too much! It's just that one has to come to a recommendation and it seems the more you know the harder it is . . . . .

Try your local banks' trust departments. Be prepared, it's not a free service if you can find a bank trust department that will do it.

Thank you!!!!!!!!

A participant in a defined contribution plan has elected to receive $700 a month. She is eligible for a total distribution. She just prefers to do it this way rather than rolling to an IRA. It's a series of substantially equal payments but not calculated on her life expectancy. So which withholding rules apply? Is it the rules for periodic payments which are like withholding on wages, the 10% on non-periodic payments or 20%? Is the specific type of situation discussed in the IRS Code? Reference? Thanks!!

Maverick - I'd be careful using the employer's EIN for the plan's withholding. We had a situation where this caused the plan's withholding and the employer's withholding from pay to get confused at the IRS. Resolution is pending - still!

Is anyone aware of specific IRS language covering this? My thinking is the distribution fee should come "off the top:" For example: Vested Benefit is $10,000 and participant elects to roll to an IRA, the IRA received $9,970 (the distribution fee is $30) and a distributable amount of $9,970 is reported on the 1099-R. If a cash distribution is taken, the gross amount would be $9,970, 20% would be withheld, and the balance paid to the participant. Thoughts? What are YOU doing?

Having done the taking a job at a lower salary deal, all I can suggest it to discuss the matter frankly with prospective employers. Yes, some will wonder if you'll bolt to a higher paying position, but there aren't any out there now. They need help and you need a job. At the same time I was taking that lower paying job, an attorney friend of mine had set a salary he had to have and would not even consider a position for anything less. He thought I was nuts. I've worked my way back to more than I was earning before and in a position I like a lot better. He's delivering mail for the Post Office. You may want to try reputable recruiters, the emphasis in on reputable.

You need one for registration of assets unless you have a corporate trustee. You do not want plan assets registered in the employer's EIN.

There is a search group that advertises on this bulletin board and someone posted to say they had 100% luck using it. If you go back a few weeks you should find it. They charge $10 per search.